mortgage overpayments or invest elsewhere?

jammerr

hello,

i've got a little over 5k in a 1.5% isa. the rate is pitiful and i'm looking to do something else with it.


i can help pay off my mortgage (2.79%) with it ,which would use the full same, or i can invest elsewhere.

i currently have 2k invested in shares which is my emergency/don't touch fund. i would be able to borrow money off my parents if needed if an emergency came around (not to the tune of 5k though!)

seen different choices and opinions, some say invest in stocks and shares isa, some say shares, some say something like nutmeg, some say don't touch and it and leave it for a rainy day (but annoys me rate is so poor), transfer it to the first direct 6% account (could do max of £3600) or use it to pay the max off my mortgage this year.

advise will be helpful as i know the 1.5% is the worst option out there! (i'm keen on hammering down my mortgage tbh)

thanks in advance

Archi_Bald

Santander 123, keeps your money readily available, and you can get some 2.4% after basic rate tax? Plus some monthly cashback?

kidmugsy

jammerr wrote: »

i can help pay off my mortgage (2.79%) with it ,which would use the full same, or i can invest elsewhere.

Is the mortgage the flexible sort, where you can overpay and then borrow the overpayment back later, if you want to?

jammerr

Archi_Bald wrote: »

Santander 123, keeps your money readily available, and you can get some 2.4% after basic rate tax? Plus some monthly cashback?

is this the best option though? if my mortgage rate is 2.79% doesn't this cancel it out? i've just transferred to first direct but would consider if this the best option. it's a good suggestion as i've seen the account and would give me some change back per month, but not convinced it's the best choice for 5k. plus i don't know if i want that money to be readily accessible in my main current account. leads to temptation!

jammerr

kidmugsy wrote: »

Is the mortgage the flexible sort, where you can overpay and then borrow the overpayment back later, if you want to?

i think so, but even if it isn't i can borrow money from family if i get into a real scrape?

F1F93

Always keep 6 months (at least!) kept in cash so if you lose your job, you won't lose your house. I'd open up a Nationwide Flexdirect and a First Direct regular saver and dripfeed for a year. Build this £5000 up until you can afford six mortgage repayments or preferably more. Then keep this in cash (123 account is good!) and invest the rest.

I personally would never overpay, as you can easily beat your mortgage rate with savings/investing.